If you’re thinking about filing for a chapter 13 bankruptcy but own multiple cars there are a number of factors that will determine if you will be able to keep them. These include whether or not you have equity in the vehicles, how much the payments are, and if there is a reasonable necessity to having multiple cars. In many cases, debtors are allowed to keep a vehicle in chapter 13.
Own the Vehicle Outright
If you happen to own both of your cars outright then equity will play a huge roll. Having a large amount of equity seems like a good deal, until you file for bankruptcy. This means there is a potential to sell the cars and make a profit which can be used to pay off creditors; which is exactly what will happen in a chapter 13 bankruptcy.
Any property owned by the debtor is considered bankruptcy estate once you file the papers. You may use exemptions – either state or federal depending on your state laws – to keep unsecured debts, but exemptions are limited and your equity may exceed the exemption amount. This is when the trustee may take the vehicle to repay part of your debt. Generally, this is more common in a chapter 7 bankruptcy, but it is part of both chapters.
Financed Vehicle in Bankruptcy
If you have financed the vehicles before bankruptcy and still owe on them, this is when your trustee will calculate your debt to income ratio. Because you are expected to be put on a payment plan to repay your secured debt the ratio should be fairly low.
If there is an apparent need for both vehicles to complete the bankruptcy process – such as your only mode of transportation for you and your spouse to get to and from work – then you have a better chance at keeping them. If, for example, one of the parties stays home then the judge may force you to turn the asset over to the bk.
Bankruptcy Auto Loans
In either case if you are forced to surrender your vehicles you’re not out of luck. Here at Bankruptcy Auto Financing we can help you find a post-bankruptcy auto loan that is affordable for your new budget. Our subprime lenders specialize in high risk loans and have the tools and experience needed to get you approved.
Apply online today to see what you could qualify for.
Remember, we are not lawyers and cannot give legal advice. The situations discussed are only our experiences over the years and may vary with each customer.